Eco 202 ch 25 production and costs

800
-1

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
800
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Eco 202 ch 25 production and costs

  1. 1. Chapter 25 ! Production and Growth
  2. 2. Saudi Arabia Energy Consumption Buying Production Selling Today 2030? Future
  3. 3. U.S. Energy Production Selling Consumption Buying Today 2030? Future
  4. 4. Subsidize Petrol? Price Too much and too cheap Supply - Market Supply - Subsidize Pm Ps Qm Qs Demand Quantity
  5. 5. Profit attracts Innovation Innovation drops cost allowing price to also drop Price Innovation Innovation Innovation Innovation Price Cost Time
  6. 6. Whales to 747s
  7. 7. ideas technology methods Intellectual Human trust knowledge skills personality health relationships Entrepreneur money and risk savers and borrowers time is money Culture Financial (1+r)n insurance   limited liability corporations Physical natural resources time buildings equipment things than make things
  8. 8. Productivity Output divided by Input
  9. 9. How do we go from this... to this?
  10. 10. 1800 Population 2010 one billion seven billion Change 7x Life Expectancy 26 years 66 years 40 + GDP Per Capita Per Day $3 $30 10 x
  11. 11. GDP Per Capita GDP: $70,000,000,000,000 Population: 7,000,000,000 GDP Per Capita: $10,000 Source: https://www.google.com.sa/publicdata/explore? ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&tdim=true&dl=en&hl=en&q=world%20gdp#! ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=region&ifdim=regi on&tdim=true&hl=en_US&dl=en&ind=false
  12. 12. Rates and Compounding Linear versus Exponential
  13. 13. Linear versus Exponential Adding versus Compounding 64 64 ^ 56 48 40 32 32 24 16 16 8 0 2 1 + 4 2 8 6 8 3 4 10 5 12 6
  14. 14. Rule of 70s Years to Double 70 divided by the rate of growth 70 Rate of Growth
  15. 15. Rate 1% 2% Years to Double 70 ÷ 1 = 70 70 ÷ 2 = 35 Size in 70 years? 2x 4x 3% 70 ÷ 3 = 23.3 8x 4% 5% 70 ÷ 4 = 17.5 70 ÷ 5 = 14 16 x 32 x
  16. 16. Why do Standards of Living differ? One word ! Productivity
  17. 17. Productivity Better at making stuff
  18. 18. What is Wealth? What people want
  19. 19. What is Capital? Anything that helps you create wealth
  20. 20. Five Types of Capital Cultural Human Physical Intellectual Financial
  21. 21. Cultural Capital
  22. 22. Worldview Political Legal Economic
  23. 23. Cultural Capital How people view and treat other people ! Expectations
  24. 24. Cultural Capital Property Rights Rule of Law Political Stability No peace ... No prosperity
  25. 25. Lady Justice Weight of the evidence versus Status of the parties
  26. 26. Human Capital
  27. 27. I look for three things in hiring people. ! The first is personal integrity, the second is intelligence, and the third is a high energy level. ! But of you don’t have the first, the other two will kill you. ! - Warren Buffett, CEO, Berkshire Hathaway
  28. 28. Trust Integrity Competence
  29. 29. Human Capital Trust Knowledge and Skills Health and Nutrition Social Relationships
  30. 30. Health & Nutrition
  31. 31. Physical Capital Two types Tools Natural Resources Water, Oil, Minerals
  32. 32. Physical Capital Tools we use to make stuff ! Natural Resources Renewable Non-renewable !
  33. 33. Intellectual Capital Technology How the world works How we make smart things and make things smart
  34. 34. Research and Development Patent System 20 Year Monopoly on your idea
  35. 35. Intellectual Capital Human Capital
  36. 36. Financial Capital Money ! Allows us to store labor and shift time
  37. 37. Spend or Save? Savings versus Consumption
  38. 38. Three Steps Save instead of consume Investment in new capital Increase productivity
  39. 39. Capital Allocation Right capital at the right time
  40. 40. Innovation - Productivity
  41. 41. Continuous Innovation
  42. 42. Education Each year in school adds 10 percent to income ! Invest versus consume
  43. 43. Population Growth More people Smaller slices GDP GDP per capita Grow the pie faster than population
  44. 44. Population Growth A smaller slice of a larger pie is bigger than a larger slice of a smaller pie
  45. 45. How you slice the pie Culture determines the size of the pie !
  46. 46. U.S. Farmers 1800 - 90 percent 1900 - 45 percent
  47. 47. U.S. Farmers 2012 - 2 percent
  48. 48. Productivity Growth More people More ideas More innovation More wealth
  49. 49. Quiz 1. What are the five types of capital? 2. What is global GDP per capita? 3. If a country is growing at 5 percent, how long will it take to double GDP? 4. What is productivity? 5. Name two types of physical capital.

×